John Sutter v. Oxford Health Plans
2012 U.S. App. LEXIS 6618
| 3rd Cir. | 2012Background
- Oxford Health Plans, LLC and Dr. Sutter signed a 1998 Primary Care Physician Agreement with a broad arbitration clause and no express class arbitration provision.
- Disputes arose in 2002 over Oxford's alleged improper denial underpayment and delays in reimbursements to participating physicians, including a proposed class action.
- The Superior Court compelled arbitration and ordered class certification issues to be resolved by the arbitrator.
- An arbitrator concluded the clause authorized class arbitration, interpreting the clause as broad enough to include all disputes, including class actions.
- Oxford sought vacatur under the FAA, arguing the arbitrator exceeded powers in permitting class arbitration, citing Stolt-Nielsen.
- Lower courts denied vacatur; the case was appealed to the Third Circuit seeking to vacate or reverse arbitration on §10(a)(4) grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrator exceeded powers by ordering class arbitration | Oxford contends Stolt-Nielsen requires vacatur for lack of contractual basis. | Sutter argues clause text and breadth support class arbitration; arbitrator acted within authority. | No; arbitrator's construction of the clause to authorize class arbitration was within powers. |
| Standard of review on vacatur under FAA §10(a)(4) | Vacatur appropriate for manifest overreach of power. | Arbitrator's interpretation should be reviewed de novo; gaps require deference to the award. | De novo review of legal conclusions; deferential to award on factual matters; vacatur limited to four grounds. |
| Effect of Stolt-Nielsen on class-arbitration determination | Stolt-Nielsen requires vacatur when no contractual basis for class arbitration is found. | Clause construction here found a contractual basis; Stolt-Nielsen does not require precluding breadth-based reasoning. | Arbitrator did not exceed powers; Stolt-Nielsen is distinguished on facts. |
| Whether breadth of arbitration clause alone can justify class arbitration under the contract | Breadth was not enough without explicit consent; should not infer consent to class arbitration. | Breadth can support implied authorization for class arbitration when intent supports it. | Breadth, combined with the clause's structure, supported class-arbitration authorization. |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (2010) (default rule: no class arbitration absent contractual basis)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (recognizes differences between bilateral and class arbitration; FAA preemption context)
- Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1 (1983) (strong federal policy favoring arbitration and enforceability of awards)
- Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (exclusive grounds for vacatur under FAA; contract cannot supplement them)
- Brentwood Med. Assocs. v. United Mine Workers of Am., 396 F.3d 237 (3d Cir. 2005) (upholding arbitration award despite errors; limits of vacatur)
- Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir. 2010) (arbitration powers and contract-based limits under FAA)